An increased focus on engineering has entered the outsourcing space with services such as product design and automation for both upstream and downstream oil & gas companies
The imminent retirement of close to half the industry workforce over the next decade has added a new area of concern for oil and gas companies
Oil and gas companies are moving towards a global model which will synchronize their business processes across diverse working environments – a radical departure from how most have operated previously
Nov 2011: The oil and gas industry is arguably the most economically important sector in the world as it meets more than two-thirds of the global energy demand. The industry is facing issues such as high price volatility for oil products, a shortage of talent, aging infrastructure, and constantly changing compliance requirements; apart from broader macro-economic challenges which include declining production, rising consumption and low reserves.
The focus of the industry is now on cost containment, increased process efficiency, a greater use of technology for exploration and refining, and better relationships with suppliers and vendors. As a result of this, there are opportunities for service providers in this domain to offer industry-specific solutions across the entire oil and gas value chain.
New research from HfS Research, the leading research analyst firm focused on outsourcing and shared services strategies, and co-authored by ValueNotes, a leading provider of business research, highlights the benefits of outsourcing in the oil and gas industry as major players in the market turn to service providers to address their business challenges.
Popular outsourced services include Energy Trading and Risk Management (ETRM), supply chain management, enterprise asset management, ERP platform integration, IT Infrastructure, and retail automation solutions. An increased focus on engineering has entered the outsourcing space with services such as product design and automation for both upstream and downstream companies.
It is estimated that as much as 50% of the energy workforce will retire by 2017. To prepare for a possible shortage in quality talent, organisations have started to document existing business processes and tasks, understand and capture best practices from their retiring workforce, and automate them using process models. The result is an interesting new set of offerings that service providers are working on to help the next generation of workers learn from past experience. In mature areas such as IT, F&A, and HR, the outsourcing industry can ease the pain of the retirement crunch just by supplying competent professionals to replace the retiring boomers.
Oil and gas companies are currently facing a combination of opportunities and challenges, including streamlining processes, automating design, and increasing the focus on alternative sources of energy. There is also greater focus on managing end-to-end components along the industry value chain. They are moving towards a global model which will synchronize their business processes across diverse working environments – a radical departure from how most have operated previously. The service provider landscape features a select number of providers offering end-to-end specialised industry solutions. These solution providers are focused on providing value beyond cost arbitrage by leveraging a combination of onshore-offshore delivery models and the use of technology.
Trends such as these have been explored in our report titled – How is outsourcing fuelling the oil & gas industry. The study investigates industry drivers, the major services outsourced, and the service provider landscape and segmentation; and discusses the trends in outsourcing over the next few years.